Council of the Law Society of New South Wales v Kekatos - [2021] NSWCATOD 90 - NSWCATOD 2021 case summary — Zoe

NSWNSWCATOD

Council of the Law Society of New South Wales v Kekatos

[2021] NSWCATOD 90

NCAT Occupational|2021-05-10|Before: Darke J

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Court

NCAT Occupational

Decision date

2021-05-10

Before

Darke J

Source

Original judgment source is linked above.

Judgment (15 paragraphs)

[1]

Introduction

On 20 August 2020 the Council of the Law Society of New South Wales (the Law Society) filed an Application in this Tribunal alleging that the respondent solicitor, Jim Kekatos (Mr Kekatos) had misled New South Wales Land and Property Information (LPI) when requesting the removal of two caveats registered on property located at Green Valley (the Green Valley Caveats). The Law Society alleged that Mr Kekatos' conduct constituted professional misconduct, both under the common law and under the Legal Profession Uniform Law (NSW) ("the Uniform Law").
The Particulars in the Law Society's Application set out that Mr Kekatos had acted for a Mr Corrado Sanna, who owned a property at Green Valley (the Green Valley Property). On or about 19 January 2016, Mr Kekatos signed and caused to be lodged with LPI a document requesting the removal of the Green Valley Caveats (the Caveat Removal Request).
The Caveat Removal Request was in the following terms: 1. On 24 July 2015, Wyse & Young International Pty Limited commenced Proceedings by way of summons in the Supreme Court of New South Wales for the extension of the above caveats being documents number AH 153770 and AH 153818. 2. On 7 August 2015, the matter was listed for Hearing before His Honour Justice Darke. His Honour found that there was no caveatable interest and accordingly made Orders refusing the application of the Plaintiff for the extension of the caveats, and refused leave to lodge further caveats on the property.
Mr Kekatos attached to the Caveat Removal Request the judgment and orders of Justice Darke made on 7 August 2015 which he had referred to in the document.
On or about 16 February 2016 the Green Valley Caveats were removed from the register.
The Law Society's Application then alleged that the judgment and orders of Justice Darke made on 7 August 2015 did not refer or relate to the Green Valley Caveats, but to other caveats lodged on the Green Valley Property. Furthermore, when Mr Kekatos lodged the Caveat Removal Request, he knew or ought to have known that Justice Darke's orders did not refer or relate to the Green Valley Caveats.

[7]

The Green Valley Caveats proceedings

On or about 19 June 2015 Mr Sanna then instructed Mr Kekatos to take steps to have removed the latter three Caveats lodged by the Dimitriou Companies on the Green Valley Property. Mr Kekatos lodged an Application for Lapsing Notices for these three caveats. He was not instructed at this time to seek the removal of the Green Valley Caveats.
On 24 July 2015, the Dimitriou Companies commenced proceedings 2015/217506 against Mr Sanna for orders seeking the extension of the operation of these three caveats or for leave to issue fresh caveats. These proceedings also came before Justice Darke.
On 7 August 2015 His Honour gave an ex tempore judgment in which he found that none of these three caveats disclosed an equitable interest. His Honour declined to extend their operation and refused leave to the Dimitriou Companies to lodge fresh caveats. Mr Kekatos was in Court when the judgment was given. A written version of His Honour's judgment was annexed to Mr Kekatos' affidavit. As far as we can ascertain, the judgment has not been reported.
In relation to the caveat lodged by Wyse & Young, His Honour said that it was defective in form in that it failed to give particulars of the nature of the interest or estate claimed in the land. Also, whilst the 2012 Retainer Costs Agreement contained language supporting an argument that the recipients had given a charge over their real property, there was no evidence that Mr Sanna had signed the document.
In relation to the caveat lodged by Defined Properties, His Honour found that the caveat was again defective in form and neither the Deed of Loan nor the General Security Agreement gave rise to a caveatable interest over the property. His Honour referred to his previous decision given on 18 May 2015 where he had rejected the caveat lodged by Defined Properties on the Copacabana Property in the same terms as its caveat lodged on the Green Valley Property.
His Honour also did not accept that the caveat lodged by Wolgan Consulting, which relied on the Saving Fee Agreement, gave rise to a caveatable interest. Thereafter the three caveats were recorded as lapsed on 13 September 2015.

[9]

Mr Kekatos' affidavit evidence

In his affidavit Mr Kekatos said, in relation to these events: 45. I have since the outset of this complaint accepted and acknowledged that the way in which I expressed Request AK 184 628 was inadequate and not reflective of the terms of (i) My conversation with Ms Jeavons, or (ii) The orders made by Darke J on 07.08.2015 46. The substance of the reasons for these orders and the earlier orders made on 18.05.15 was the reason why I rang Ms Jeavons… 47. The error in what I did occurred, I think, because of my rushing to get the Request done and in as soon as possible, in part because of Mr Sanna's instructions and in part so that my conversation with Ms Jeavons was fresh in my mind.
He said that his understanding of the two decisions of Justice Darke was to the effect that the General Security Agreement and the Costs Agreement of 21 October 2011, that is two of the documents also relied on to support the Green Valley Caveats, did not give rise to any caveatable interest in land.
In relation to the Acknowledgement of Debt dated 24 July 2012, also relied upon in Caveat AH 153 818 lodged by Wyse & Young, Mr Kekatos conceded that this agreement had not been referred to in any of the other caveats lodged by the Dimitriou Companies, but said that: 18. My recollection is that in the course of the proceedings about the Copacabana proceedings an attempt was made to rely on this document to obtain leave for the making of a further caveat and that there was argument about its efficacy for caveat purposes. 19. Any contention that any caveatable interest could arise out of this document was abandoned.
Mr Kekatos said that he had been "sloppy in what I did", and that if he had taken more time about the Caveat Removal Request, he would have been more careful in the way he had prepared it. He repeated what he had already said in his prior correspondence with the Law Society that "there was no intention to either mislead the LPI or defraud Defined or Wyse & Young".

[11]

The Law Society's submissions

The Law Society said that the evidence demonstrated that Mr Kekatos had intentionally misled LPI. The wording of the Caveat Request explicitly stated that Wyse & Young had sought orders in proceedings 2015/217506 for the extension of the Green Valley Caveats and that Justice Darke's judgment and orders of 7 August 2015 had included an order refusing the extension of those caveats. The Law Society submitted that Mr Kekatos knew both matters to be false or, at the least, he was recklessly indifferent as to the consequences of his actions.
The caveats which were the subject of the 7 August 2015 judgment and orders were drafted in similar terms to the Green Valley Caveats, so there was nothing in that judgment or orders to indicate to LPI that they did not in fact refer or relate to the Green Valley Caveats.
The Law Society submitted that under cross-examination Mr Kekatos had admitted that he knew at the time that he had prepared the Caveat Removal Request that it contained inaccurate information. This was said to be inconsistent with what was contained in paragraph 11(1) of his Reply, where he had said that he was not aware of the errors until they were brought to his attention on 27 May 2016.
The Law Society submitted that it was improbable that Mr Kekatos had not intended the Caveat Removal Request to refer to the Green Valley Caveats. To make it explicit that the document was not intended to refer to those caveats, it was necessary to do more than remove one or two words, as Mr Kekatos had suggested. It said that the following deletions (which we have underlined), would have needed to be made to the Caveat Removal Request: On 24 July 2015, Wyse & Young International Limited commenced proceedings by way of summons in the Supreme Court of New South Wales for the extension of the above caveats being document number AH 153770 and AH 153818 and the following underlined words added: in the same terms and relying upon the same documents as are relied upon in the above caveats.
The Law Society said that those amendments alter the form and substance of the original document so significantly that it is unreasonable to conclude that the original wording was merely a typographical oversight or an error of copying and pasting.
The Law Society submitted that Mr Kekatos also had an incentive to mislead LPI. He knew that Mr Sanna had already incurred substantial costs in relation to the removal of the other caveats lodged on the Green Valley Property. He also knew, according to the Law Society's submission, that Mr Sanna believed that Mr Dimitriou had defrauded him and that he owed no money to Wyse & Young and that the relationship between them was acrimonious. Accordingly, he sought a way to have the Green Valley Caveats removed without incurring costs in the lapsing notice process and the subsequent court proceedings likely to be instituted by Mr Dimitriou.
The Law Society submitted that the Tribunal has on many occasions found solicitors who intended to mislead in the course of legal practice guilty of professional misconduct under the statute or at common law. In Law Society of New South Wales v Manolakos [2018] NSWCATOD 54, the Tribunal had recently determined this to be the case in relation to a solicitor who provided misleading information concerning an application to lodge a caveat.

[12]

Mr Kekatos' submissions

Mr Kekatos' position was that he had made a mistake. He acknowledged that what he had said in the Caveat Removal Request was inadequate and not reflective of the terms of his conversation with Ms Jeavons or the orders made by Justice Darke on 7 August 2015.
He said that since the complaint was first notified to him on 1 July 2016, he had always admitted his error. Whilst he had put forward a number of circumstances which had led to him making the error, he had consistently denied in his correspondence with the Law Society that he had an intention to mislead LPI or to defraud Wyse & Young and Defined Properties.
In his submissions, Mr Lynch on behalf of Mr Kekatos also made the point that if Mr Kekatos' intention was to mislead LPI, there was no reason for him to have spoken with Ms Jeavons before he lodged the Caveat Removal Request. He submitted that in that conversation Mr Kekatos gave a generally accurate account to Ms Jeavons of what had in fact occurred - that is, Justice Darke's orders related to the other caveats on the Green Valley Property, albeit in similar (though not identical) terms to the caveats that Mr Kekatos now wished to be removed. Mr Lynch submitted that if the Caveat Removal Request had come to Ms Jeavons' attention, as she had said was likely to be the case, that conversation may have alerted her to inquire further about precisely which caveats were the subject of Justice Darke's orders.
Mr Lynch also said that if the Caveat Removal Request had given an accurate account of what had occurred, it is likely that LPI would have removed the Green Valley Caveats from the register in any event. This was because the Green Valley Caveats were similar in form to the caveats rejected by Justice Darke in his judgment and orders of 7 August 2015 and in his earlier judgment in May 2015 in relation to the Copacabana Caveats.
Further, it was submitted that the extract from the Registrar General's Guidelines attached to the Respondent's Chronology outlined a procedure for the removal of "ineffective caveats" that may have allowed for the lapsing of the Green Valley Caveats without the need to lodge formal lapsing notices.

[13]

Our findings

The Law Society's case, in essence, is that the errors in the Caveat Removal Request, and Mr Kekatos' admissions in relation to those errors, leads inevitably to the inference that when drafting the document, he acted deliberately or recklessly. Mr Kekatos, in contrast, maintains that he made a mistake, albeit an egregious one.
The Tribunal has come to the view, on the evidence before it, that it cannot be comfortably satisfied in accordance with the standard of proof specified in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (and which is applicable to these disciplinary proceedings), that Mr Kekatos acted intentionally or recklessly in relation to his lodging the Caveat Removal Request.
The Law Society submitted that Mr Kekatos had admitted under cross-examination that he knew at the time that he had prepared it that statements in the Caveat Removal Request were false. We do not think that he made that concession. We have set out above his answer to this question. He said that he knew what Justice Darke's orders said, but that he failed to convey this in the Caveat Removal Request.
His answer to the subsequent question to the effect that he knew what the words in the Caveat Removal Request meant is not, in our view, to be taken on its own as an admission that he intended to mislead LPI. This response, when read in the context of his answers to previous questions put to him about the Caveat Removal Request, was not inconsistent with his position from the outset that he had failed to give proper attention to what he had written in the document.
Overall, we are of the opinion that Mr Kekatos gave his evidence honestly and openly. He conceded that he had acted incompetently, but at no stage did he admit that had acted with intent to mislead. In the absence of relevant admissions from Mr Kekatos, the Law Society's case can rely only on inferences which might be drawn from the surrounding circumstances. We do not find that evidence to be sufficiently compelling.
It is also significant, in the Tribunal's opinion, that there was no evidence that Mr Kekatos' actions were part of a course of conduct and were other than a one-off occurrence.
We also accept, in the absence of any evidence to the contrary, that Mr Kekatos' account of his conversation with Ms Jeavons on 19 January 2016 was an accurate account. Further, we do not accept the Law Society's submission that the evidence establishes that Mr Kekatos had a motive for acting as he did. The factors relied upon by the Law Society reveal only that Mr Kekatos was acting expeditiously and seeking to reduce costs for his client. There was no evidence that Mr Kekatos obtained any personal benefit from attempting to mislead LPI.
Finally, although it does not alter our overall finding, we note for the record that we do not accept the submission made on Mr Kekatos' behalf that LPI would have removed the Green Valley Caveats from the register even if the Caveat Removal Request had clarified that Justice Darke's orders did not refer or relate to the Green Valley Caveats. The extract tendered from the Registrar General's Guidelines does not satisfy us that this would have inevitably occurred. The acknowledgement of debt dated 26 July 2012, relied on in Caveat AH 153 818, was not the subject of any finding by Justice Darke in his 7 August 2015 judgment or in his earlier judgment regarding the Copacabana Caveats.
If Mr Kekatos did not act intentionally or recklessly but only mistakenly, the Law Society's allegation that the conduct constituted professional misconduct under the common law cannot be sustained. His error cannot be categorised as conduct that would reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute and competency as set out in Allinson v General Council of Medical Education and Registration [1894] 1 QB 750.

[14]

Does the conduct constitute professional misconduct under s 297(1)(a) of the Uniform Law?

The Law Society also relied on s 297(1)(a) of the Uniform Law in support of a finding of professional misconduct. That section provides that professional misconduct includes: unsatisfactory professional conduct of a lawyer, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence.
In s 296, unsatisfactory professional conduct is described as including: conduct of a lawyer in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.
At the conclusion of the hearing the Tribunal asked the parties to consider whether the significant errors in the Caveat Removal Request, even if not made deliberately, could constitute conduct amounting to "a substantial failure to reach a reasonable standard of competence or diligence".
A joint memorandum was provided by the parties containing helpful commentary on decisions of this Tribunal, the Administrative Decisions Tribunal and the Court of Appeal on appeal from those Tribunals, where the phrase "substantial failure" in s 297(1)(a) of the Uniform Law or s 497(1)(a) of the Legal Profession Act 2004 (NSW) (repealed) ("the LPA"), had been considered. That provision, now repealed, was in the same form as s 297(1)(a) of the Uniform Law.
All the decisions to which we were referred in that memorandum characterised only the most serious lapses of competence or diligence by lawyers as constituting a "substantial" failure. The general statement of principle was best expressed in Council of the New South Wales Bar Association v Asuzu [2011] NSWADT 209, where the Tribunal considered how the expression "substantial" had been interpreted in other statutes, and concluded that in the LPA substantial should be taken "as referring to a failure to meet the requisite standard in a way that is meaningful or relevant to the legal practitioner's ability to practise law".
In Xu v Council of the Law Society of NSW [2009] NSWCA 430 (Xu), the solicitor had appealed a decision of the New South Wales Administrative Decisions Tribunal which had found him guilty of professional misconduct under s 497(1)(a) of the LPA. The matters which the Tribunal found established to support this finding were that he had said that he had witnessed a signature when he had not, that he had knowingly provided a false certificate pursuant to s 66W of the Family Law Act 1975 (Cth), and that he had improperly imposed a lien over a passport.
The Court of Appeal held that the conduct constituted unsatisfactory professional conduct only. Handley AJA held at [41] and [59] that the solicitor's conveyancing work was "incredibly sloppy" and "irresponsible" but this did not constitute a substantial or a consistent failure to reach a reasonable standard. There was no evidence of dishonesty and the acts were isolated.
In Council of the Law Society of New South Wales v CZD [2017] NSWCATOD 153, the Law Society had alleged that there had been a substantial failure by the solicitor to reach or maintain a reasonable standard in that she had certified copies of a power of attorney and a form of enduring guardianship as true and correct copies without seeing the originals, and further that she had used the falsely certified copies to obtain medical records and financial information.
The Tribunal found these matters to have been established but characterised the conduct as unsatisfactory professional conduct and not professional misconduct. The solicitor's conduct was not deliberate or recklessly indifferent to the consequences of her actions. Further, there was no evidence that these errors and omissions were reflected in any other aspect of her practice.
Whilst to some extent these decisions, and the other cases referred to in the joint memorandum, turn on their own individual facts and circumstances, they assist us in concluding that Mr Kekatos' conduct, which we have not found to have been intentional or reckless and to have been an isolated event, cannot be categorised as a substantial failure to reach or maintain a reasonable standard of competence or diligence. Thus we find that the conduct does not constitute professional misconduct under s 297(1)(a) of the Uniform Law.
Nevertheless, Mr Kekatos' conduct in relation to the Caveat Removal Request falls short of the standard of competence or diligence that a member of the public is entitled to expect from a reasonably competent lawyer, and it was appropriate for him to have made that admission. We adopt the words used by Handley AJA in Xu and find that Mr Kekatos acted in an incredibly sloppy manner and that his conduct amounts to unsatisfactory professional conduct under s 296 of the Uniform Law.
Having regard to our finding of unsatisfactory professional conduct and that the hearing on 10 May 2021 was to determine the question of liability only, we make the following orders: 1. The Respondent is guilty of unsatisfactory professional conduct; 2. These proceedings are stood over to be listed for directions and to fix a hearing date to determine what disciplinary orders the Tribunal ought to make.

Council of the Law Society of New South Wales v Kekatos

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